Chrysler's 'Everyman' CEO Promises to Continue Momentum

AUBURN HILLS, MI Frankness comes naturally to Tom LaSorda, who is more Everyman than executive. His forthright manner makes life interesting for those charged with crafting the official corporate image that emanates from Chrysler Group headquarters. In an exclusive interview with Ward's, the new CEO broaches the subject of supplier bankruptcies. Every year, LaSorda says, Chrysler evaluates the financial

His forthright manner makes life interesting for those charged with crafting the official corporate image that emanates from Chrysler Group headquarters.

In an exclusive interview with Ward's, the new CEO broaches the subject of supplier bankruptcies. Every year, LaSorda says, Chrysler evaluates the financial performance of its suppliers to determine what risks exist for its component pipeline.

He declines to say how many suppliers pose high risk but admits: “We don't need any more going into bankruptcy.”

Adds LaSorda, the pragmatist: “Do we have backups? Yes. If we see a supplier that could be, in our assessment, not viable in the long term, we'll move the business.”

Then out comes LaSorda, the so-called “plant rat” and son of a prominent former United Auto Workers union leader. Suggesting mismanagement, he slams a well-known non-automotive company for filing Chapter 11.

Tom LaSorda

“All these people lose their jobs and everybody at the top gets rich,” LaSorda says disgustedly.

Papers rustle as corporate public relations staffers attending the interview appear disquieted. One leaves the room shaking his head and talking to himself, only half-feigning exasperation.

And LaSorda blushes.

“Every once in awhile, I slip out how I honestly feel,” he says.

But LaSorda's bluntness could bode well for DaimlerChrysler AG's North American subsidiary as it steels itself against the coming year, which promises more of what 2005 has been dishing out: continued threats volatile gas prices pose to pickups and SUVs, its highest-margin product segments, and more crises in the supply community.

Material costs also will continue to soar, LaSorda adds, along with the price tag on employee and retiree health care-benefits.

Yet, as Chrysler's fortunes improve and seemingly run against the tide in Detroit, there seems far less need to spend time discussing legacy costs and corporate restructuring in LaSorda's office at the top of the company's headquarters here.

Indeed, Chrysler increasingly is trying to separate its image from that of its struggling cross-town rivals.

Through October, Chrysler sales totaled 1.96 million, up 6.1% compared with the first 10 months of 2004. And its market share had risen to 13.7% from 13.0% in 2004.

General Motors Corp. and Ford Motor Co. saw their share of the U.S. market fall to 28.5% and 18.5%, respectively – a decline of 1.3% for GM and 1% for Ford.

LaSorda wants to talk about Chrysler's most ambitious newproduct launch schedule ever. From small cars to SUVs, 10 new Chrysler, Dodge and Jeep vehicles will make their debuts in 2006 – most in the latter half of the year.

Despite the expenditures required to execute these launches, LaSorda is confident Chrysler is making the right play at the right time.

“This whole story's about product and drawing people to the showroom,” he says. “I will put the money on the product every time and then fight it out at retail.

“This is a tough and ruthless business,” he adds. “Nobody owes us anything.”

Chrysler's 2006 product push began little more than five years ago, when LaSorda's predecessor, Dieter Zetsche, arrived in Detroit from DaimlerChrysler AG in Stuttgart.

“When Dieter came, we said, 'Hold on. We've got segments that we can really attack,'” LaSorda recalls. “And out came the (redesigned) minivan. And out came the LX-based products (Chrysler 300, Dodge Magnum and Charger) and the new Jeeps.”

Chrysler's signature Stow 'N Go seating-and-storage feature revitalized the auto maker's minivan lineup in 2004. Twenty-one years after it created the new vehicle type, and more than 11 million sales later, Chrysler still leads the minivan segment in market share. Japanese and Korean brands are catching up fast, however.

Despite the relative dearth of differentiation in the segment, LaSorda predicts minivans will remain attractive for the foreseeable future.

“If you look at the average parent's weekend, you don't go just with your kids in the car,” he notes. “You're loaded up.”

Functionality makes up for the sameness that permeates minivan designs, LaSorda says.

Quick to poke fun at his manufacturing background, he adds: “You're kind of restricted from a proportion perspective. Don't I sound like a designer now?”

The LX rear-wheel-drive passenger cars have been a critical and a commercial success since their launch last year. Sales of the redesigned Jeep Grand Cherokee totaled 178,119 units, up 21% through October, while deliveries of the diesel-powered Jeep Liberty exceeded expectations as the total inched toward 8,000 units by the end of October.

And the recently launched Jeep Commander, the brand's first vehicle to feature three rows of seats, is finding favor – particularly among women, LaSorda says. His wife ordered one after planning to get a Grand Cherokee.

“Then we said there's a segment that we really need to go after, which would be small car,” LaSorda recalls.

Since 1999, the number of U.S.-built cars equipped with 4-cyl. engines has increased more than 2% to 49.7%, according to Ward's data.

“It was perfect timing. It's almost like we had this crystal ball about what's going to happen in the economy,” LaSorda says.

But Chrysler's crystal ball said nothing about hybrid electric vehicle powertrains. After spurning the technology in favor of alternatives such as diesel engines, DaimlerChrysler joined forces with GM and – in a development deal announced in September – BMW AG. (See related story: BMW Joins GM, DC Hybrid Program)

“We know we're late,” LaSorda says, conceding the technology has captured the public's imagination. “However, with the joint venture, we're very, very confident about the new design and where we're taking it. We can come out with something that's extremely competitive, a breakthrough in technology.”

The partnership already has a work site in Troy, MI, where engineers are attempting to develop their own variation of the fuel-saving technology pioneered by Toyota Motor Corp. and Honda Motor Co. Ltd.

“We think it's here to stay, for awhile at least,” LaSorda says of HEVs. “If you're doing a hybrid within the city, stop-and-go traffic, it's a great advantage. There's no debate there.”

But diesel technology offers superior highway performance. And new gasoline engines, such as the ones built by GEMA, are more fuel-efficient than their predecessors, LaSorda adds.

Chrysler's first HEV powertrain is scheduled for introduction in the '08 Dodge Durango SUV – a vehicle that might need to put on a green face to hold a significant place in the auto maker's lineup.

“When you look at the size of an SUV like a Durango – am I concerned about Durango? Yes,” LaSorda admits.

In October, when gasoline prices hovered around $3 per gallon, Durango sales dipped more than 30% compared with October 2004.

The Environmental Protection Agency's Fuel Economy Guide puts the Durango's estimated consumption between 13 mpg and 21 mpg in the city, (18 L/100 km and 11 L/100 km) and between 18 mpg and 28 mpg (13 L/100 km and 8 L/100 km) on the highway, depending on the drivetrain.

But Chrysler is expanding availability of its fuel-saving Multi-Displacement System (MDS), making it standard equipment on the 5.7L V-8 Hemi-powered '06 Durango. The cylinder-deactivation technology can reduce fuel consumption by as much as 20%, Chrysler says.

Also expected in 2006 are a redesigned Jeep Wrangler and a pair of entry-level Jeeps based on two concepts unveiled in Frankfurt this year, the Compass and Patriot. Powered by GEMA-built 4-cyl. engines, insiders say the vehicles will be assembled alongside the Caliber at Chrysler's plant in Belvidere, IL.

LaSorda does not confirm which vehicles will share the plant with Caliber but notes Belvidere marks a significant turning point in Chrysler's manufacturing strategy.

“We said, 'If we're going to (build the Caliber), let's make sure the plant's flexible to at least do three or four models, then we can flex between the midsize car and a small car,'” LaSorda says.

The midsize car is the successor to the Dodge Stratus, which will be based on the same platform as Caliber and assembled at Chrysler's plant in Sterling Heights, MI.

The auto maker also is on course to maximize the capacity utilization of its plants by the end of next year, and LaSorda vows that by 2007 the auto maker's average assembly hours per unit will not exceed 31. This improved efficiency will enable Chrysler to launch more products, faster. “Maybe next time it's 12 or 14 (launches) he says. “The world is changing. We've got to move fast. I don't have plans for 14 right now. But who knows?”

How Chrysler will compensate the workers who assemble these vehicles isn't known. The UAW recently agreed to concessions, such as payraise deferrals and increased prescription co-pays to help boost the fortunes of beleaguered General Motors Corp. Chrysler is on record saying it expects the same treatment, out of fairness. But this is the only topic that does not elicit LaSorda's trademark candor, other than to say his family ties to organized labor do not mean he'll tiptoe around negotiating with the UAW.

“I'm worried about my company first and foremost,” he says. “And my company includes unionized labor, non-unionized labor, management and retirees. “It's more about making sure we stay successful and build an enterprise that stays for the next generation. I think that's a leader's job. It's to protect the next-generation employment level.” Now in his third month as Chrysler CEO, LaSorda is quickly winning the admiration of employees from the shop floor to the top floor, just as Zetsche won them over five years ago.

“Of course,” LaSorda says. “But we also have him (Zetsche) as our boss, too, to help us if we need anything. He's always going to be the ultimate coach. “Then again, we're here to deliver tough numbers that he'll set for everybody. And that's what we're here to do.” Having grown up in Windsor, Ont., Canada, just across the border from Detroit, LaSorda, a devotee of lean production methods and a one-time GM manufacturing guru, has a strong allegiance to the domestic industry. And with a brusque wave of his meaty right hand, he dismisses naysayers who predict the business isn't big enough for Detroit's Big Three.

“No way,” LaSorda says. “GM will not go under. Ford will not go under. We won't go under. And we're going to rebound. It's full throttle for us in '06. “We want (GM and Ford) healthy,” he adds. “I always say, 'We want them to have limited success.'”

On a recent trip to his hometown , LaSorda returned to his manufacturing roots with a surprise visit to a Chrysler minivan plant there, just four blocks from the home of his father, Frank LaSorda. And during his tour, insiders say, the Everyman emerged.

“He didn't walk the aisles like most executives do,” says Gary Parent, secretary-treasurer of Canadian Auto Workers Local 444, the Canadian successor to Frank LaSorda's UAW local and bargaining agent for Windsor's hourly Chrysler employees.

Instead, Tom LaSorda spent time on the assembly line, sidebyside with workers.

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